Cisco Scores Core Wins

Recent statistics and a couple of wins announced today seem to indicate Cisco Systems Inc. (Nasdaq: CSCO) has gained back some market share against Juniper Networks Inc. (NYSE: JNPR) in core routers lately.

XO Communications Inc. announced that it's picked the CRS-1 for a core-backbone upgrade involving nine U.S. locations, and Savvis (Nasdaq: SVVS) says it included the CRS-1 in its latest buildout. (See XO Picks CRS-1.)

The XO build, which includes a first phase of 10 CRS-1s that go live this week, is notable, considering the carrier had been using Juniper in the core since 2001, when the M160 and M40 won the job for an OC192 buildout. (See XO Deploys Juniper Routers.) Thanks in part to the telecom crash, XO hasn't needed much upgrading in the IP network since then. Its priority has been the optical backbone, which got updated with Infinera Corp. (Nasdaq: INFN) gear. (See XO Picks Infinera Again.)

Predictably, XO says the Juniper boxes aren't going anywhere. "Juniper will continue to be in our network. This will be an augment," says Don MacNeil, XO's vice president of carrier services.

XO is being vague about why it bypassed Juniper, which has its own T640 and the upcoming T1600 as core options. (See Juniper Attacks Cisco's CRS-1.) "Cisco just made more sense for our business model," MacNeil says.

Considerations included total cost of ownership and some marketing support from Cisco related to XO's enterprise business -- meaning, for example, that Cisco and XO will collaborate in some promotion and training efforts, MacNeil says.

Savvis's case is a bit less of a surprise. Savvis did inherit a Juniper-based backbone upon acquiring Cable & Wireless assets in 2004. (See Savvis Bulks Up.) But in combining its network with C&W's, Savvis decided 18 months ago to go with Cisco, says Ron Dobes, Savvis's vice president of product management. That includes the CRS-1 in the network core and Cisco 1800 and 3800 routers at the customer premises, he explains.

Juniper declined to comment for this story.

The CRS-1 has given Cisco a bit of a comeback against the Juniper T640, which had picked up some market share points earlier this decade. How much ground Cisco has regained is debatable, though.

Cisco says it's got a 61.9 percent market share in core routers, but figures from the Dell'Oro Group put Cisco's share at 56 percent at the end of September, up from 55 percent the previous quarter.

It's true Cisco has rebounded, as its core-router share fell to 54 percent at the end of 2005, says Dell'Oro analyst Shin Umeda. But on average, Cisco and Juniper have been holding steady with core-router share in recent years. "You'd have to go back to the 2002 timeframe" to see figures that are much different, he says.

Cisco was happily disclosing CRS-1 sales figures for a while, citing $110 million in revenues for the quarter ending October 2006, for example. (See Cisco Soars in Q1.) Cisco's stopped doing that, although it continues to say the CRS-1 is doing well.

— Craig Matsumoto, West Coast Editor, Light Reading

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gotman 12/5/2012 | 2:57:53 PM
re: Cisco Scores Core Wins > Assuming the T1600 does start shipping this
> quarter

"Assuming" ...Do you know if it is, or have you heard rumors it might not be?
Pete Baldwin 12/5/2012 | 2:57:53 PM
re: Cisco Scores Core Wins I don't have the stats in front of me, but I'd expect that Cisco and Juniper each gain and retreat in market share regularly, depending on who's released a new product most recently.

So: Assuming the T1600 does start shipping this quarter, with noticeable revenues not coming til next year sometime -- how much of a bump does Juniper get from it?
tsat 12/5/2012 | 2:57:52 PM
re: Cisco Scores Core Wins
Possible Tranlation:

"They gave us the CRS-1's for free"


gotman 12/5/2012 | 2:57:52 PM
re: Cisco Scores Core Wins Thanks... We will sit tight and wait for T1600's first win making headlines here.
Pete Baldwin 12/5/2012 | 2:57:52 PM
re: Cisco Scores Core Wins Gotman -- Actually, that's my mistake, Juniper says the T1600 *did* start shipping this quarter. So disregard my "assuming" statement.

My original statement wasn't based on any rumor, btw, i was just trying to be conservative. Schedules slip sometimes, that's all.
Honestly 12/5/2012 | 2:57:52 PM
re: Cisco Scores Core Wins 10%. T1600 should put the mo back in JNPR's camp.

Also when you say core wins lets put that into perspective. Core wins with tier 1 and 2 global providers is something very different from these two wins. This truly is nothing to get excited about and If Chambers does, or pretends to its a real dumb spin job.
gzkom 12/5/2012 | 2:57:51 PM
re: Cisco Scores Core Wins Craig,

The correct symbol for XO Communication is XOHO.ob.
vferrari 12/5/2012 | 2:57:50 PM
re: Cisco Scores Core Wins "They gave us the CRS-1's for free"

Or "Even though they didn't win our technical evaluations, we'll lose discounts on other gear including switches if we don't buy their routers."
everythingip 12/5/2012 | 2:57:47 PM
re: Cisco Scores Core Wins does it really matter, all vendors try to win business any way they can...it all business :-)
prs6str 12/5/2012 | 2:57:46 PM
re: Cisco Scores Core Wins I'm always amused when the critics come out against Cisco winning a deal. I suppose they became the dominant player in networking through giving away their product at every turn? I'd like to see the explanation of how they maintain the excellent margins they have if this is the case. For any strategic deal or any one of good size, Juniper is as guilty as any company at offering an attractive financial package.

That being said, the CRS-1 is a very compelling technology offering. Cisco's primary issue is that Juniper can offer an "upgrade" that should be more financially viable to start since they re-use components, etc. Cisco really has to go the extra mile to get customers to rip out a working Juniper for a CRS-1 vs. simply defaulting to a T1600 upgrade. Quite frankly, any Juniper T640 replacement is big news because that means Cisco convinced a customer to rip it out and learn something new vs. going the path of least resistance, cost, and training.
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